Tesla profit tops target; Musk sees no demand problem

STORY: Tesla on Wednesday ended its streak of posting record quarterly revenues.

But its drop in profit was smaller than expected, with a string of price hikes on its electric vehicles helping to offset production challenges caused by lockdowns in China.

The EV-maker reported a total revenue of $16.93 billion in the second quarter, down from $18.76 billion a quarter earlier.

Chief Executive Elon Musk said he expects inflation to start easing by end-2022 and most commodity prices to stabilize.

On an earnings call, Musk dismissed the idea that global economic problems were hurting interest in Tesla, despite vehicle prices' rising to what he called "embarrassing levels."

The U.S. price of Tesla's Model Y long-range version, now just shy of $66,000, is up more than 30% since the start of 2021.

Musk insisted Tesla does not have a demand problem, but a production problem.

Tesla's China factory ended the second quarter with a record monthly production level.

Musk said new factories in Berlin and Texas aimed to produce 5,000 cars a week by the end of the year.

The company’s executives acknowledged supplies of older-generation microchips remained tight, but said there were no major problems in supplies of chips and batteries, barring unforeseen COVID-related shutdowns.

Chief Financial Officer Zachary Kirkhorn said Tesla was still pushing to reach 50% growth in deliveries this year.

He added that while the target had become more difficult, "it remains possible with strong execution."